TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, September 26, 2012

NY Attorney General Refuses to Back Off Investigation of 501(c)(4) Groups

NYAG-sealFollowing up on last week's post, Camp, Hatch Call on NY AG to Back Off Investigation Into 501(c)(4) Groups: New York Attorney General Eric Schneiderman sent this letter to the top Republicans on the House Ways & Means Committee and Senate Finance Committee informing him that he will not back down in his investigation of 501(c)(4) groups:

I am certain that as Chairman and Ranking Member of the congressional committees that oversee the IRS, you share my interest in ensuring compliance with our tax laws and promoting accountability. I therefore write to correct your apparent misimpressions concerning the right of state officials to obtain and utilize information that may appear on tax returns in carrying out our law enforcement functions.

Under our federalist system, each state has a fundamental interest in ensuring compliance with its tax laws and in regulating certain activities of nonprofits. ... While you correctly identify procedures for obtaining tax returns and tax return information from the IRS, those procedures do not prohibit state authorities from requesting such documents or information directly from taxpayers. ...

I hope you share my understanding of federalist principles, which contemplate a crucial role
for state law enforcement. The recent activities of some tax-exempt organizations and businesses have been matters of great concern to New Yorkers. While my office respects applicable federal requirements and restrictions, I will continue to perform my duties and enforce the laws of the State of New York.

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General Schneiderman is, of course, 100% correct.

Posted by: Publius Novus | Sep 26, 2012 8:55:30 AM